In the midst of continued uncertainty regarding states’ respective COVID-19 strategies, M&A markets continued their momentum through July with a number of notable transactions. As we monitored the market last month, we noted three important themes from across healthcare M&A and capital markets activity.
- Primary Care: While last month’s insights highlighted the stress on primary care providers due to low patient volumes, this month reminded markets of the significant disruption and investment taking place in the space. We continue to see significant capital deployed into innovative, tech-enabled primary care solutions that are rethinking an area of care whose delivery has remained largely unchanged for years. An estimated $260 billion is spent annually on primary care in the US, yet access to and quality of care remains a hurdle. Considering the massive annual spend and demonstrated clinical benefits of primary care, new care delivery models being brought to the market by well-capitalized disruptors are here to stay. Despite COVID’s negative impact on individual primary care practices, funding continues to flow into the space and at significant valuation levels.
- Post-Acute Provider Technology: Shifting healthcare payment models, regulation, governance, and compliance have fueled much of the healthcare IT and SaaS spend in the acute setting. This long-established trend has and will continue to impact the post-acute setting as well, as providers seek to simultaneously improve quality, outcomes, and the patient experience, all while adequately supporting staff and cutting costs. We expect to see continued emphasis on tech-enabled services that leverage data in supporting the delivery of care, enabling care coordination, streamlining workflows, and facilitating greater interoperability across any number of platforms.
- Payer Technology: Digital strategies are quickly accelerating across the healthcare ecosystem and payers who sit between the patient and provider are essential to driving change. While there is a continued need for transformative technologies that help exchange, process and review administrative, claims and clinical data quickly and accurately, consumer experience and engagement have become equally vital. Technology that is capable of containing cost while maximizing member growth and engagement are vital to succeeding in a value-based era and will be a key focus for payers. As such, we expect to see increased activity across assets focused on digital health and the consumer experience.
Several transactions in July aligned with these themes:
- Oak Street Health, a Chicago-based primary care provider for Medicare patients, announced the terms for its IPO. At the time of announcement, Oak Street planned to raise $250M at a price range of between $15 – $17 per share. The Company has since closed its offering at $21 per share, raising ~$377 million. Oak Street provides care to around 85,000 patients across 8 states in the Midwest with over 250 primary care providers and over 50 health centers.
- Humana (NYSE: HUM) invested $100 million in Heal, a provider of in-home and virtual primary care visits. Heal currently operates in 7 states and the investment will be used to expand that footprint into new markets such as Chicago, Charlotte, and Houston. As a result of the pandemic, Humana has seen increased demand for home-based care.
- VillageMD, a Chicago-based provider of primary healthcare services, received a $1B investment from Walgreens Boots Alliance (NASDAQ:WBA), a retail and wholesale pharmacy company. The expanded partnership will open 500 to 700 “Village Medical at Walgreens” physician-led primary care clinics in more than 30 U.S. markets in the next five years, with the intent to build hundreds more thereafter.
- Doctor On Demand announed a $75 million in Series D financing led by General Atlantic. Doctor On Demand provides virtual urgent care, behavioral health, and primary care services and has more than doubled its covered lives in the past six months with demand driven by the pandemic.
- Wellsky, a provider of technology solutions to post-acute and communicate care providers, , and existing investor TPG Capital, announced an additional investment from Leonard Green & Partners. As part of the transaction, TPG will make a new investment in Wellsky and will remain a 50% shareholder.
- Forcura secured a growth investment from Accel-KKR. Focura’s technology and analytics solutions streamline workflows, referrals, and care coordination efforts for post-acute care providers.
- HealthEdge, a provider of Core Administrative Processing Systems (CAPS) solutions to customers across the healthcare ecosystem, announced the acquisition of The Burgess Group. Burgess is a payment integrity software company focused on improving healthcare payment operations through technology. TripleTree served as financial advisor to Blackstone and HealthEdge on the acquisition of Burgess.
- TA Associates and Francisco Partners announced that they have signed a definitive agreement to make a significant growth investment in Edifecs. Edifecs is a U.S. based healthcare technology company with payer solutions focused on interoperability, workflows, value-based care payments and analytics. TripleTree served as financial advisor to Edifecs.
- Seniorlink, a tech-enabled company that empowers caregivers coordinating care for seniors, has been acquired by Thomas H. Lee Partners. Seniorlink provides caregivers with education, support and case management services to help care for loved ones with complex needs or chronic conditions in the home.
TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and let us know what you think!